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Friday, September 9, 2016

As the 12/31/16 deadline for Florida high-rises to opt out of a full sprinkler retrofit looms large, the confusion regarding which multifamily buildings should opt out, why and what the consequences of that opt out vote will be escalates.

Here are the top five questions I've been asked over the last several months from condominium and cooperative associations throughout Florida.

1. Should low and mid-rise buildings vote to opt out?

The decision to opt out for low and mid-rise buildings requires a conversation with knowledgeable association counsel. I have some of my low and mid-rise clients who are taking the opt out vote and others who are not.

I have discussed the preventative value of an opt out vote for non-high-rises, however, there are also some perceived disadvantages to taking the vote as well including the fact that post vote notice requirements must be followed including the possibly chilling impact on sales and rentals when owners must notify all future potential purchasers and potential renters about the opt out vote.

When I have this discussion with my low and mid-rise clients the factors we discuss include:

Physical configuration of the building; specifically whether there are exterior catwalks with two remote entrances at each end.

Age of the building. If the building is three stories or higher (but fewer than 7) and was built after 1994 the permitting process required sprinkler installation so the potential need to opt out should no longer exist.

The existence of a local ordinance or code pertaining to sprinklers and low and mid-rise buildings. If such an ordinance or code exists then I am inclined to recommend the opt out vote for those low and mid-rises.

The percentage of short-term rentals permitted in the building. If a building has enough short-term rentals it may be treated as a public lodging establishment and its life safety requirements are much higher which might make the opt out vote more compelling.

The existence of commercial units in the building.

2. Will filing a Petition with the DBPR for a Declaratory Statement to clarify whether low and mid-rise buildings should opt out solve the problem?

No. The DBPR does not make or enforce the Life Safety Code. The Division will likely deny any such petition based on the fact that it does not have jurisdiction to interpret fire codes. A member of the Division initially took the position in a press article that the ability of all buildings to opt out under Chapters 718 and 719 of the Florida Statutes must mean that those low and mid-rise buildings must do so or be forced to retrofit. The Division has since backed off that position thanks to the efforts of the Florida Bar's Condo Committee, outreach by Senator Jeremy Ring, one of the sponsors of the opt out bill, and members of my law firm, Becker & Poliakoff. As such, there is absolutely no need to ask the Division to weigh in on a matter for which it has no jurisdiction and has already backed off an initially incorrect stance. It might be easier for some attorneys to have the Division undertake the legal analysis needed to answer clients' questions on the highly complicated sprinkler question but please see my comment in #1 about having a conversation with knowledgeable legal counsel on this topic.3. Do high-rises who have opted out still have to install sprinklers?

Yes, partial sprinklers are typically part of an Engineered Life Safety System (ELSS) and, while buildings which would otherwise have to fully retrofit have the right to opt out of that full sprinkler retrofit, an ELSS cannot be waived. The main difference is that an ELSS typically only requires the installation of a sprinkler head just inside the entrance to a unit or in the kitchen while a full sprinkler retrofit is much more intrusive with sprinklers located throughout each residence. There is some growing talk about seeking new opt out rights from an ELSS and we will have to wait and see if that legislation has any real chance at passing. Buildings which are required to retrofit with full sprinkler retrofits and opt out before the deadline must then install an ELSS as an alternative to that full sprinkler installation. If your building was not required to fully retrofit you would not be required to install an ELSS. HOWEVER, there are elements of an ELSS which are otherwise required under the Life Safety Code so the Fire Marshal usually gets you one way or the other.

4. Can we use online voting to take the sprinkler opt out vote? Unfortunately, it is not advisable to use online voting for the sprinkler opt out vote even though doing so would be the most convenient method for high-rise buildings with a significant percentage of out-of-state owners.

Section 718.112 (2)(l)1, F.S. provides that "a vote to forego retrofitting may be obtained by limited proxy or by a ballot personally cast at a dully called membership meeting or by execution of a written consent by the member." Moreover, the notice of the meeting at which the opt out vote will be taken CANNOT be transmitted electronically but must be mailed or hand delivered to each unit owner at least 14 days' in advance. Given the significance of the sprinkler opt out vote it is best not to attempt taking same via online voting regardless of the convenience factor involved.

5. What if we took the opt out vote but forgot to take some of the post vote steps required by law?

The statutes require that associations who successfully vote to opt out of the full sprinkler retrofit must take the following steps:

File a Certificate with the Division reflecting the opt out vote.

Mail or hand deliver to notice of the results of the opt-out vote within thirty (30) days after the vote takes place to every owner. Compliance with this requirement must be evidenced by an affidavit from the person providing the notice and such affidavit must be maintained as part of the official records of the association.

After the association sends out notice to each owner, each owner must then provide a copy of that notice to a new owner before closing or to a renter before signing a lease.

If you failed to record your Certificate on the Opt Out Vote or failed to hand deliver your Notice of the Opt Out vote within thirty (30) days after your vote occurred, you should consider retaking the vote in an abundance of caution prior to the deadline. There is no way to tell right now if failure to take these post vote steps is a fatal flaw in the process but you certainly don't want your association to be the test case.

As you can see from the foregoing, this puzzle is only going to be solved by relying on the advice of your own experienced counsel and not by relying on free blogs and newsletters. Even folks with good intentions can harm others by providing inaccurate or incomplete information.

The moral of this post: please try to resist relying on information from entities and groups who use important topics like the sprinkler retrofit vote in Florida as a marketing tool.

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This blog is intended for general informational purposes only and is not intended to offer legal advice in any form whatsoever. Blog readers are urged to consult their own legal counsel to obtain specific legal advice. The blog author reserves the right to answer or decline to answer any comments. Any answers given to blog comments do not constitute legal advice nor do they create an attorney-client relationship. Offensive or defamatory comments will be removed.